Highlights

  • Valaris shows 248.11% one-year basic EPS growth, a P/E of 7.29 and PEG of 0.00.
  • Second quarter net income attributable to Valaris was $50.4 million, against $115.1 million.
  • Contract backlog was $4,585.2 million at August 5, 2026, against $4,672.3 million at February 17.
  • Valaris agreed to a business combination with Transocean at 15.235 Transocean shares per Valaris share.

Basic earnings per share growth of 248.11% over one year, a trailing twelve-month P/E of 7.29 and a PEG of 0.00 on an expected basis define Valaris (NYSE:VAL) as an undervalued growth stock, with shares trading at USD 101.68 on October 28, 2026, up 3.53%. In its latest disclosures, the offshore drilling contractor entered a Business Combination Agreement with Transocean Ltd. on February 9, 2026, sold VALARIS 104 in April, and reported second quarter 2026 net income attributable to Valaris of $50.4 million in early August.

Valaris Limited is incorporated in Bermuda, with its principal executive offices in Hamilton, Bermuda. It describes itself as a provider of offshore contract drilling services to the international oil and gas industry, with operations in almost every major offshore market across six continents. As of August 6, 2026, it owned 43 rigs: 13 drillships, one semisubmersible and 29 jackups. It also holds a 50% interest in ARO, its unconsolidated joint venture with Saudi Aramco, which owns nine rigs. Its segments are Floaters, Jackups, ARO and Other.

Growth: Second Quarter Earnings, Revenues and Operating Income

Net income attributable to Valaris was $50.4 million in the second quarter of 2026 against $115.1 million a year earlier, and $34.0 million for the six months against $77.2 million. Basic earnings per share were $0.73 against $1.62 for the quarter and $0.49 against $1.09 for the six months. Diluted earnings per share were $0.72 against $1.61 for the quarter.

Total operating revenues were $539.2 million against $615.2 million in the second quarter, and $1,004.6 million against $1,235.9 million for the six months. Compared with the first quarter of 2026, revenues exclusive of reimbursable revenues rose 17% to $502.3 million, which the company attributed partly to $84.4 million of incremental revenues from VALARIS DS-17, DS-12 and DS-10, all on new contracts. Operating income was $51.1 million against $164.1 million a year earlier. Other income included a $36.6 million pre-tax gain on the sale of VALARIS 104.

Valuation: P/E of 7.29, PEG of 0.00 and Cash Flow

The P/E ratio of 7.29 is measured on trailing twelve-month earnings, and the PEG ratio of 0.00 on expected growth. Total Valaris shareholders' equity was $3,220.7 million at June 30, 2026 against $3,169.6 million at December 31, 2025. Net cash provided by operating activities was $88.1 million for the six months against $275.9 million, and capital expenditures were $206.4 million.

Capital and Balance Sheet: Backlog, Debt and Liquidity

Contract drilling backlog was $4,585.2 million at August 5, 2026 against $4,672.3 million at February 17, 2026, with floaters at $3,016.3 million and jackups at $1,133.4 million. A contract extension for VALARIS DS-4 added about $426.0 million and a 41-well contract for VALARIS 248 added about $140.0 million. ARO backlog, at 100%, was $1,834.1 million.

Cash and cash equivalents were $541.2 million at June 30, 2026 against $599.4 million at December 31, 2025. The company has no debt principal payments due until 2030 and had $375.0 million available under its 2028 Credit Agreement at July 30, 2026. Debt consists of $1.1 billion of 8.375% Senior Secured Second Lien Notes due April 30, 2030. A share repurchase program of up to $600.0 million has about $175.0 million available, with no repurchases in the 2026 or 2025 six-month periods.

Disclosed Risks and Outlook

The company said conflicts in the Middle East reduced operating income by approximately $30.0 million in the second quarter and $38.0 million in the six months, mainly higher war-risk insurance costs for jackups and project delays for VALARIS 250 and VALARIS 116. It stated that an escalation could make the impact higher. Merger and integration expenses were $11.4 million for the quarter and $25.0 million for the six months. Valaris would owe Transocean a $173.0 million termination fee under certain circumstances, and completion requires shareholder and regulatory approvals. Under the agreement, Transocean shareholders would own about 53% of the combined company and Valaris shareholders 47%, on a fully diluted basis.

The company also disclosed a Malaysian tax assessment of approximately MYR117.0 million, on which it has paid $26.0 million while contesting it, and rising personnel and supply costs. ARO has not made a cash distribution of earnings since its formation, and Valaris may be required to contribute to ARO's newbuild jackup program, with its commitment now at $1.1 billion.

For the outlook, the company expects the Middle East impacts to moderate in the second half of 2026 as VALARIS 250 resumed its bareboat charter in July and VALARIS 116 is expected to resume in the third quarter. It projects 2026 capital expenditures of $425.0 million to $475.0 million and expects two drillships to return to work this year.